[2020 National Audit] Bae Jin-gyo "IBK Loan Interest Rates Higher Than Commercial Banks"

"Credit Loan Interest Rates Higher Than Commercial Banks and Larger Loan-Deposit Interest Rate Gap"
Among Last Year's Dividends of 382.6 Billion KRW, Government Dividends Accounted for 166.2 Billion KRW
The Government Profiting from Interest Income Collected from Small and Medium Enterprises

[Asia Economy Reporter Kangwook Cho] IBK Industrial Bank of Korea has been criticized for setting credit loan interest rates higher than commercial banks, operating contrary to its founding purpose of supporting small and medium-sized enterprises (SMEs).

On the 16th, Bae Jin-gyo, a member of the National Assembly's Political Affairs Committee from the Justice Party, analyzed the SME loan status data submitted by IBK. According to the analysis, IBK had less favorable conditions in credit loans compared to commercial banks. Based on loans handled from June to August 2020, IBK's credit loan interest rate was 2.97%, up to 0.68% higher than commercial banks, and the additional interest rate was also high at 2.13% compared to the four major commercial banks.

The interest rate spread between deposits and loans has also exceeded 2% since 2015 and was the highest among the four major commercial banks as of 2019.

On the other hand, as of the end of 2019, the BIS ratio of the four major commercial banks was maintained above 15%, whereas IBK's was lower at 14.50%. Despite the need to increase capital to expand SME loans, IBK paid out dividends of 382.6 billion KRW during the same period. Of this, the government received 166.2 billion KRW in dividends.<표3>

Assemblyman Bae pointed out, "Considering the difficult economic situation due to COVID-19, it is problematic that IBK, which has a high proportion of loans to SMEs and self-employed individuals, has higher loan interest rates than commercial banks," and added, "It is necessary to secure and support stable policy funds for low-credit SMEs while simultaneously expanding low-interest loans so that smooth funding can be provided to SMEs and the self-employed."

He also emphasized, "It is problematic that the government receives dividend income by charging high loan interest rates to struggling SMEs and self-employed individuals facing the worst economic conditions such as COVID-19," and stressed, "The Ministry of Economy and Finance should reduce IBK's dividend payout ratio to increase the BIS ratio and improve the loan policy to better suit the conditions of SMEs."

This content was produced with the assistance of AI translation services.